Why is employee engagement so important? Aren’t we happy with someone just doing their functional job well? What more do we want from people?
All good questions, and pertinent ones if you’re hoping to make strategy work within your organization. The problem with primarily focusing on satisfaction is that while it plays a role in what you’re trying to accomplish, it’s not the most important issue. It doesn’t correlate to employee behaviour in at a meaningful level. Case in point: An employee could be an underperformer, but totally satisfied.
For the financially focused types, is all this just a bunch of hooey that HR uses to justify burning off your budget? You’ll be happy to learn that a 10% increase in engagement leads to 8% more discretionary effort, which leads to 2% improvement in performance. Towers-Perrin (2009) discovered that 4 out of 5 employees are not contributing at to their potential. Further Gallup (2002) discovered that actively disengaged employees cost the organization $3400 for every $10,000 in salary. It’s also linked to people’s attitudes about improving the organization, positively impacting quality and cost savings, and the likelihood of staying with the organization. This is just a couple of examples, but the available data clearly showing that engagement is closely related to productivity, performance and financial returns is piling up.
So is there a connection between the amount of value your employees create for your organization and their level of engagement?
– Highly engaged employees return 120% of salary in value
– Engaged employees return 100%
– Somewhat disengaged employees turn 80% of salary
– Actively disengaged employees return 60% of salary
So basically there is a significant portion of potential productivity and value creation that gets left on the table by organizations whose employees are not in those more engaged categories.
My belief is that for many organizations, money hogs too much of the limelight in strategy. When asked about primary strategic objectives, I hear about capital and retained earnings to a degree that indicates that the strategic focus of many organizations doesn’t extent beyond financial management. Let’s go back to the early 90’s when strategy gurus Kaplan and Norton launched the balanced scorecard to shift the focus from money management to balanced management in order to shift the focus from dollar bills to how you actually create profitability … a focus on people, clients, internal business processes.
Excessive focus on financials poses a number of problems:
– it shifts the focus away from clients and things like value disciplines (why do we have to focus on the client, the important issue here is financials)
– it shifts the focus away from why you’re doing any of this in the first place, the impact you’re trying to create
– It shifts the focus away from how you create profitability, leading indicators, and balance
It goes without saying that for most organizations, profitability is the point. But even for these organizations, a great leader will see a vision that extends beyond simply turning a dollar, there will be a societal need or impact that drives why you do what you do. Again, the exercise of building a strategy map will go a long way toward clarifying what the ultimate purpose of your organization is. As an example, for organizations like non-profits, cooperatives, etc… profitability is only a means to an end, hence finance as a focus area should never be the top line of your map. And this begs the question, “what is?”
Am I saying that you need to lose your focus on financial management? Not if you want to stay in business! Am I saying that strategy needs a bigger perspective than “I want to make money, so I can make money”? Indeed I am.
If you were to walk around your organization and ask employees what the vision of the company was… what would be their response? Can everyone rattle it off? Is that really the point, to be able to regurgitate it? In fact, get up and do that right now… then come back and read the rest of this.
One of the greatest mistakes that strategy practitioners make is to allow an organization to maintain a series of purpose statements (vision or mission, etc…) that no one knows or pays attention to… and to leave it unchallenged. Continuing to publish a statement like this maintains the illusion that it (the vision) is out there and working. People then take comfort in the idea that the “planning” is done and they can get back to the operations. Take this to mean vision as a concept of visionary purpose, rather than a one liner that is cast in bronze and subsequently forgotten.
We all know that from an organizational motivation perspective, we need the following environment for people to do their best:
1) An inspiring, commonly held goal, consistently modeled by leadership – how does all of this roll up to something important?
2) A relentless focus across the organization that results in people talking about it often
3) Line of sight on how “I” contribute to that vision
4) and… an environment where people are surrounded by others who believe in their ability to achieve that goal, and who have a hunger for results
And yet even though the conceptual importance of point #1 is fairly universally understood, this gap continues to persist in more organizations than not. What it comes down to is this: If the understanding of an employees’ job extends only to their functional role (I hire people, I manage individual projects, I do financial transactions) then you’re missing the second half of what they can bring to the table. Understanding WHERE you’re going and WHY is what releases people’s energy, creativity and passion. By doing the work to put compelling purpose in place, you’ll start to draw out the other half of what your people can bring to the table as they begin to do their functions with the purpose of accomplishing corporate strategy progression versus completing the individual task.
Engagement is another good word for what we’re talking about. And yet engagement is sometimes seen as something HR needs to deal with, when it’s much broader than that. Engagement stems from leadership, strategic clarity, and treating people like you value them (yes, HR management). Every person brings so much to the table at your organization in terms of potential. When you take the time to engage them in clear, compelling direction… help them see their role and provide them with opportunities to contribute to something important… they will.
“Leaders must see reality as it is, not as it ought to be.” – Benjamin Netanyahu
One of the greatest things a leader can facilitate is an environment that is conducive to an organization finding its own blind spots. Don’t be fooled, every organization has them. Blind spots are areas where your assumptions about your environment, your performance, your operations or what your customers think are incorrect. Blind spots can allow business risk to accumulate unchecked.
It’s a fact: people look for information to support their existing view of the world. It’s how we stay sane. Not only do we seek it out, we’re relieved to find it. When people are confronted with information that challenges their beliefs, excuses and disbelief almost immediately ensue. This is both good and bad… it keeps us from being all over the map, but unchecked it can also keep us from recognizing the importance of information that could be right under our noses.
The first step to maintaining a truly accurate view of your world is to acknowledge that some of your views COULD be wrong. This opens you up to the idea that if conflicting outliers in the data surface, it shouldn’t be simply dismissed. The second step is to recognize that not acknowledging information that hints at the potential inaccuracy of your base planning assumptions is like covering up your face and thinking that no one can see you. The realities of your environment don’t change because we refuse to acknowledge them.
Some things to consider:
– What mechanisms are in place to allow information that doesn’t support the commonly held view of the world to be considered? When was the last time you challenged the base assumptions behind how you plan with top management?
– Does your culture embrace continuous improvement, and see this kind of information as an opportunity? How often are improvements implemented, and how successfully?
– Do sacred cows play a role in organizational decision making? Is there an unwritten list of things your employees can’t challenge?
– Does your research program ever bring forward information that challenges the existing view?
An accurate view of your world is the basis for sound decision making.
“Discernment is the hardest part of marketing–seeing the world as it is, instead of how you experience it.” – Seth Godin
Within your organization, how strong is the drive to continuously improve? Of course it’s different from one person to the next. However, the most important question to ask will always be… “How strong is this drive within the CEO and executive team?” There are very few organizations within which the pace isn’t set by the CEO and the executive officers, and the ultimate proof of this is in the behaviours modeled rather than what is said. Executive behaviours are absolutely the strongest input to organizational culture.
An interesting question to explore at your next leadership planning session in order to determine the temperature of your burning platform might be “What level of performance is considered ‘good enough?’ How far are we willing to go? How fast are we willing to get there? And Why?” The answer to these questions are ultimately the ceiling to your organization’s or team’s performance. For whatever stance the top leadership body takes, there is a cascading effect which flows into culture, sets the temperature within the management team and employees, and determines potential.
Executive teams that live and breathe the strategy, and see it as the biggest part of their job, open up real possibilities.
Is your organization saying:
“Why go further?”
“Why not go further?”
or “Get out of our way, here we come!”
Have you ever been in a situation where a business has essentially argued with you that they are right in how they treated you, when you were frustrated or even angry with a service level? I was reminded of this tendency as I spent time on the phone with an automotive supplier the other day.
At some point in your life, you have undoubtedly encountered a tendency within the culture of some organizations to not want to believe that the customer’s expectations are reasonable… and that they (the company) are right. I call that the “yabbut” response… wherein company reps don’t really listen, it’s like they can’t wait to respond with a “yeah… but.” You may not even hear it out loud, it may just be a behaviour behind the scenes.
It could be a similar response when management is faced with client feedback that they don’t want to believe. When you see people rushing for excuses as to circumstances that justify why negative feedback may have occurred… that’s another version of the same behavior. People do this for lots of reasons but often because it’s perceived as attacking their self-view. How can we believe that we are as amazing as we think we are when this evidence contradicts that? When there is a tendency to defend rather than learn, to argue rather than accept, or to justify rather than be grateful for the opportunity to improve… companies lose relevance.
What you want to establish is a culture of continuous improvement. One where your team’s view of “being amazing” is driven by what we’re actively doing right now to become stronger for our clients, not coasting on past achievements… defending the status quo. This means readily accepting customer feedback, positive and negative alike. A culture where finding another opportunity to improve is valued as an opportunity. As Seth Godin said at the 2011 Chick-fil-a conference “If you’re not inventing the future, you’re defending the status quo. There are no other options.” And I believe him.
An example of a company who clearly understands continuous improvement is Lexus. In one year, they made 14,956 improvements to a car that was already considered superior. That’s commitment.
Customers don’t care about our view of what is good enough, only theirs. It’s a good reminder that your performance falls into one of three buckets with customers, and they pick the criteria:
1) You are not meeting their expectations
2) You are meeting their expectations
3) You are exceeding their expectations
This is a simple view of the world, and yet critical. Like it or not, the idea that the customer is always right stands true.